India should earnestly Act East

Having dithered when invited at ASEAN’s launch, India has been keen to make up the lost time and opportunity and integrate its economic endeavours with it. Having only old cultural and trade ties, but no border dispute, no war, no ill-will and diasporas that can be won over for support, India stands to win in getting closer to that region

A new and powerful economic ‘community’ is emerging in India’s extended neighbourhood. The Association of South East Asian Nations (ASEAN), a grouping of ten nations, has done a tremendous job of staying together, despite divergence and disparities. It is something that India, individually and as a member of the South Asian Association for Regional Cooperation (SAARC) should take serious note of.

It is so because four decades of relative calm, and no war, has made that region stable and has enabled rapid progress, enough for some of them to be called “tiger economies.” India has converted its “Look East Policy” to “Act East Policy” under Prime Minister Narendra Modi and has many lessons to learn as it seeks to integrate a good deal of its economy and strategic interests with that region.

ASEAN sees itself as becoming politically cohesive, economically integrated and socially responsible and above all, a people-oriented and people-centered grouping. It has a monarchy (Brunei), monarch-led democracies (Malaysia, Thailand), and democracies that have emerged after decades of military rule (Indonesia and Myanmar).

While elements of Hinduism and Buddhism remain, thanks to the old India connections, there are major Muslim majority nations, and countries that have people with a mix of faiths and ethnic groups. Indonesia, the world’s largest nation of Muslims, is not an “Islamic Republic,” while Malaysia, with majority Muslim Malays, a quarter of its population ethnic Chinese and eight per cent Indians, takes prides in its multi-culturalism and what it calls “moderate Islam.”

It is not that there are no problems, what with the overwhelming Chinese presence as the largest trade partner and with large émigré Chinese communities in each of these nations. The Western colonialism is a matter of past, but the region is part of the ‘pivot’ that the United States aspires to build.

Modi was at the ASEAN Summit and at the East Asia Summit that attracted world leaders including Barack Obama, Vladimir Putin, Xi Jinping, Japan’s Abe, top leaders from Australia and New Zealand, besides heads of the member-nations. Although he has interacted with most of them, has played host and visited their countries, this multilateral interaction is easily one of the more important ones that he has had since he took office.

Having dithered when invited at ASEAN’s launch, India has been keen to make up the lost time and opportunity and integrate its economic endeavours with it. ASEAN was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Cambodia, Laos, Myanmar (Burma), and Vietnam.

Its aims include accelerating economic growth, social progress, and socio-cultural evolution among its members, protection of regional peace and stability, and opportunities for member countries to resolve differences peacefully. The grouping is easily Asia’s most powerful.

With 630 million people, it is larger than the European Union (EU – 500 million)) and North America (444 million). ASEAN is the seventh largest economy with $2.4 trillion, aiming to double it by 2020 and emerge as the fourth largest economy by the year 2050.

Having only old cultural and trade ties, but no border dispute, no war, no ill-will and diasporas that can be won over for support, India stands to win in getting closer to that region. India needs to be there it if wants to join the big race for what is being touted as the “Asian Century.”

It needs to think seriously about other regional trade pacts and the Trans-Pacific Partnership (TPP) that is gathering support among ASEAN member-nations, including India’s key partners like Singapore and Vietnam. India must take a stand, and follow it up with concrete measures, or else it risks being isolated.

India may suffer on issues like intellectual property rights but stands to gain from a grouping that is designed to contain China. Obama warned that those who don’t join would stand to lose.

The message from the twin summits is that India should not just guard its interests but also play the role due to a large political entity, regionally and globally. Modi succinctly underscored the links between India and the ASEAN by saying that the latter has done its bit for Asia's resurgence and it's now India's turn.

He now needs to initiate concrete measures by his government to make the “Look East” really “Act East” and ensure that it does not remain a mere slogan or a matter of intent. Prime Minister Modi has invited Malaysia and Singapore, with whom strategic partnerships have been forged, to invest in a myriad projects – IT, energy, affordable housing, roadways and railways among them.

But he has to work to make India’s economy compatible to receive and absorb those investments, and not leave them as matters of mutual intent.

India needs to push a review of the free trade agreement (FTA) with ASEAN, getting the latter to shed the reservations about allowing Indian services in, and work out similar pacts with individual ASEAN members if it really wants to boost trade with the region.

Modi projected India’s template for good governance and economic resurgence. But measures like the goods and services tax (GST) law that would help lower tariffs, making Indian goods competitive in Southeast Asian market, and other required institutional reforms have been lagging.

They are likely to face greater political logjam, at least in the near future, slackening his ‘Act East’ resolve. With huge ethnic Chinese population and as ASEAN’s biggest trading partner, China, having deep pockets, enjoys a huge advantage over anybody in that region.

Yet, to the extent to which India integrates with ASEAN, besides yielding hefty economic advantages, could bolster the latter’s position vis-à-vis China on the territorial dispute in South China Sea. Modi did not name China, but stressed on freedom of navigation and supported the UN Convention on the Law of the Sea. The message has been clearly sent.

Modi’s Malaysian host PM Najib Razak called him “a man of action.” He said Modi had presented to Malaysia "a lot of exciting possibilities" for local companies and corporations to explore in India. "Modi has big plans to develop India in the construction of new infrastructure including in railway development, highway development, digital India, smart cities, solar energy and renewable energy," he said. Modi said India recognised Malaysia's ability in infrastructure development and was keen to raise India's participation in Malaysia's economy

Modi’s visit to Singapore was much-awaited and significant. At India-Singapore Economic Convention on November 24, Modi noted that Singapore is India’s 10th largest trade partner globally. It is also the 2nd largest in the ASEAN.

Bilateral trade has expanded manifold after the conclusion of Comprehensive Economic Cooperation Agreement in 2005. Singapore has emerged as the second largest source of FDI into India. Outward Indian FDI to Singapore has also increased in recent times. Singapore is now one of the top destinations for Indian investments.

“A significantly large number of Indian companies are registered in Singapore. Singapore companies also have a level of familiarity with Indian market due to involvement over the past few decades. Our companies are positioned to explore and develop promising engagements. With the significant and growing number of companies of both sides and of foreign companies in both markets, I expect even more exciting partnerships,” he said at the convention.

Like late Prime Minister P V Narasimha Rao, Modi is an admirer of Singapore and the ‘tiger economies’ achievements. He is also aware of the beeline that Telangana’s Chandrashekar Rao and Andhra Pradesh’s Chandrababu Naidu have made to Singapore. Located on the southeastern flank of India, across where the ASEAN is, both the States can lead the country’s “Act East” thrust.

By:Mahendra Ved